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Jenkins v. Burkey

United States District Court, S.D. Illinois

June 22, 2017




         This matter comes before the Court on the motion of defendants Bruce Burkey and Taylor Law Offices, PC (“TLO”; misnamed in the Second Amended Complaint as Taylor Law Firm PC) to dismiss the claims against them pursuant to Federal Rule of Civil Procedure 12(b)(6) (Doc. 14). Plaintiff Scott Jenkins has responded to the motion (Docs. 31 & 46). Plaintiff Rhonda Alexandropoulos has not responded to the motion, so under Local Rule 7.1(c) the Court finds she has admitted it has merit.

         I. Background

         Jenkins originally filed a nearly identical lawsuit on September 29, 2015, in the United States District Court for the Eastern District of Missouri, which described the litigation as follows:

This litigation arises from a prior lawsuit plaintiff Jenkins filed against his daughters in Nevada to regain control of a family-owned company in Nevada (the “Nevada Lawsuit”). In that lawsuit, Jenkins' daughters retained defendants Bass and Hostetler of the Nevada law firm Lewis Roca Rothgerber Christie LLP as their attorneys. In addition, plaintiff Jenkins' daughters retained defendant Burkey of the Taylor Law Firm, P.C. in Illinois.
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Plaintiffs have now brought a variety of claims against the named attorneys and law firms, which all relate to the defendants' work representing their clients opposite plaintiff Jenkins in the Nevada Lawsuit. These claims include intentional infliction of emotional distress, negligent infliction of emotional distress, intentional interference with a prospective economic advantage, defamation, negligent supervision, and breach of contract. Plaintiffs have also alleged that defendants committed fraud, fraudulent misrepresentation, conspiracy, theft, the unauthorized practice of law, illegal possession of personal credit file information, violating the Illinois Consumer Fraud and Deceptive Business Practice Act, blackmail, extortion, coercion, mail fraud, and sending threatening communications by mail. Plaintiffs also allege that defendants Bass and Hostetler illegally filed or threatened to file lis pendens in Illinois and Missouri.

Mem. & Order at 1-2, Jenkins v. Burkey, No. 4:15-cv-1494-SNLJ (E.D. Mo. June 21, 2016). In June 2016, the Eastern District of Missouri court dismissed the action for lack of personal jurisdiction over the defendants, so on July 14, 2016, Jenkins and Alexandropoulos refiled the case in the Southern District of Illinois as this case. Burkey and TLO believe the plaintiffs have failed to state a claim for the ten counts pled against them.

         II. Standard for Dismissal

         When reviewing a Rule 12(b)(6) motion to dismiss, the Court accepts as true all allegations in the complaint. Erickson v. Pardus, 551 U.S. 89, 94 (2007) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). To avoid dismissal under Rule 12(b)(6) for failure to state a claim, a complaint must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). This requirement is satisfied if the complaint (1) describes the claim in sufficient detail to give the defendant fair notice of what the claim is and the grounds upon which it rests and (2) plausibly suggests that the plaintiff has a right to relief above a speculative level. Bell Atl., 550 U.S. at 555; see Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); EEOC v. Concentra Health Servs., 496 F.3d 773, 776 (7th Cir. 2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing Bell Atl., 550 U.S. at 556). “Determining whether a complaint states a plausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Iqbal, 556 U.S. at 679.

         In Bell Atlantic, the Supreme Court rejected the more expansive interpretation of Rule 8(a)(2) that “a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief, ” Conley v. Gibson, 355 U.S. 41, 45-46 (1957). Bell Atlantic, 550 U.S. at 561-63; Concentra Health Servs., 496 F.3d at 777. Now “it is not enough for a complaint to avoid foreclosing possible bases for relief; it must actually suggest that the plaintiff has a right to relief . . . by providing allegations that ‘raise a right to relief above the speculative level.'” Concentra Health Servs., 496 F.3d at 777 (quoting Bell Atl., 550 U.S. at 555).

         Nevertheless, Bell Atlantic did not do away with the liberal federal notice pleading standard. Airborne Beepers & Video, Inc. v. AT&T Mobility LLC, 499 F.3d 663, 667 (7th Cir. 2007). A complaint still need not contain detailed factual allegations, Bell Atl., 550 U.S. at 555, and it remains true that “[a]ny district judge (for that matter, any defendant) tempted to write ‘this complaint is deficient because it does not contain . . .' should stop and think: What rule of law requires a complaint to contain that allegation?” Doe v. Smith, 429 F.3d 706, 708 (7th Cir. 2005) (emphasis in original). Nevertheless, a complaint must contain “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atl., 550 U.S. at 555. If the factual detail of a complaint is “so sketchy that the complaint does not provide the type of notice of the claim to which the defendant is entitled under Rule 8, ” it is subject to dismissal. Airborne Beepers, 499 F.3d at 667.

         In the case of a pleading alleging fraud, the standard is different. Federal Rule of Civil Procedure 9(b) requires a plaintiff alleging fraud to “state with particularity the circumstances constituting fraud.” Generally, pleading “with particularity” requires a plaintiff to describe the “who, what, when, where, and how” of the fraud, although that formulation is not set in stone and may vary based on the facts of a particular case. Pirelli Armstrong Tire Corp. Retiree Med. Benefits Trust v. Walgreen Co., 631 F.3d 436, 441-42 (7th Cir. 2011).

The particularity requirement ensures that plaintiffs do their homework before filing suit and protects defendants from baseless suits that tarnish reputations. And the requirement dovetails with lawyers' ethical obligations to ensure they conduct a pre-complaint inquiry before signing off on their clients' contentions.

Id. at 439.

         III. Facts Alleged

         Viewing all allegations in the plaintiffs' favor, the Second Amended Complaint alleges the following relevant facts related to Burkey and TLO.

         Before the Nevada Lawsuit began, Jenkins was the manager of CSRESL, LLC, a Nevada limited liability company, and was authorized to act on its behalf. Burkey was an attorney licensed to practice in Illinois but not in Nevada. He worked for TLO, an Illinois law firm. Burkey represented Jenkins' two daughters, Rebecca Frausto and Christina Jenkins, in connection with their interest in CSRESL.

         At some point Burkey obtained confidential in-house emails between attorneys and staff of a Colorado law firm Jenkins had retained to assist him with administering his deceased aunt's estate. The emails were about a subject completely unrelated to issues involved in the Nevada Lawsuit. Each email contained a warning that it was confidential and instructed anyone possessing it without authorization to destroy it and notify the email's sender immediately. Burkey did not comply with these instructions when he came into possession of the emails and instead altered the emails to make it appear that Jenkins had done something illegal during the estate administration, that he had implicated Christina Jenkins in illegal activity, and that one of Jenkins' cousins would pursue Christina Jenkins for money from the aunt's estate that was used to pay for Christina Jenkins' education. Burkey altered the emails to convince Christina Jenkins to oppose her father and participate in removing him as manager of CSRESL. Burkey knew but failed to tell Christina Jenkins that a mediated settlement agreement concerning the aunt's estate would have prevented the cousin from seeking recourse against her.

         In September 2011, Burkey represented to Frausto and Christina Jenkins that he was qualified and permitted to draft a document entitled “Action by Majority Members of CSRESL, LLC” that purported to remove Jenkins as the manager of CSRESL and replace him with Frausto. The document cites Nevada Revised Statute 86.294 as its authority, although Burkey knew that there was no such statute.[1] Burkey instructed Frausto and Christina Jenkins to sign the document as owners of the majority of membership interest in CSRESL, and they did. Burkey did not give Jenkins advance notice of the corporate action and did not have the proper authority from CSRESL, its owners or its members to draft the document. Burkey mailed the document to the Nevada Secretary of State in December 2011 for filing. Jenkins believes the document was not effective to remove him as manager of CSRESL.

         In April 2012, Burkey helped his clients remove all the money from a CSRESL bank account of which Jenkins believed he controlled as manager of CSRESL. In that same month, Burkey informed the United States Postal Service, a tenant of a CSRESL property, not to send rent payments to Jenkins as the manager CSRESL. At the time, Frausto and Christina Jenkins owed Burkey more than $10, 000 in legal fees.

         At some point, Jenkins sued Frausto and Christina Jenkins in the Nevada Lawsuit over the question of who controlled CSRESL. In the course of that litigation, Burkey provided the altered emails from the Colorado law firm to Frausto and Christina Jenkins' attorneys in the Nevada Litigation for use in that proceeding.

         At some point, Burkey sent letters to Jenkins' attorney threatening Jenkins with “purported criminal consequences” if he did not agree to a civil settlement as Burkey requested. Burkey has never presented Jenkins with evidence of any criminal or civil wrongdoing by Jenkins.

         In other letters to Jenkins' attorneys, Burkey said things that Jenkins believes were slanderous and degrading. In a 2012 meeting that Jenkins attended, Burkey falsely accused Jenkins of certain conduct without allowing Jenkins to defend himself and threatened to divulge false information about Jenkins and his business dealings if Jenkins did not agree to step down as manager of CSRESL and cede control of the company to his daughters. Burkey did not let Jenkins know he had already been removed as manager six months earlier, in September 2011.

         Burkey had an unauthorized copy of Jenkins' confidential personal credit report from TransUnion that should have been transmitted only to Jenkins. Burkey neither destroyed the credit report nor sent it to Jenkins. Instead, he used it to convince Frausto and Christina Jenkins that Jenkins was in bad financial shape and used it in the Nevada Lawsuit.

         Burkey used the United States Postal Service to transmit documents in connection with the aforementioned acts.

         Jenkins claims that he was forced to make personal expenditures of over $200, 000, mostly in legal fees, because of Burkey's alleged illegal conduct. He has also suffered distress and emotional damages from the loss of love and contact with his daughters and grandchild.

         IV. Analysis

         Burkey and TLO ask the Court to dismiss all counts against them; the Court addresses each count in turn.

         A. Count I: Fraud and Fraudulent Misrepresentation

         In Count I, Jenkins alleges Burkey made a false statement in the “Action by Majority Members of CSRESL, LLC” by citing a Nevada statute that did not exist, and then directed Frausto and Christina Jenkins to sign the improper document. Jenkins further alleges Burkey “altered and failed to adhere to” the emails from the Colorado law firm in violation of Colorado law.

         In his motion to dismiss, Burkey argues Jenkins has failed to plead common-law fraud under Illinois or Nevada law.

         Under Illinois law, the elements of fraudulent misrepresentation, also referred to as common-law fraud, are:

(1) a false statement of material fact; (2) knowledge or belief of the falsity by the person making it; (3) intention to induce the other party to act; (4) action by the other party in reliance on the truth of the statements; and (5) damage to the other party resulting from such reliance.

Doe-3 v. McLean Cty. Unit Dist. No. 5 Bd. of Dirs., 973 N.E.2d 880, 889 (Ill. 2012). Nevada law on fraudulent misrepresentation is similar to Illinois law. Under Nevada law, the elements of fraudulent misrepresentation are:

1. A false representation made by the defendant;
2. Defendant's knowledge or belief that the representation is false (or insufficient basis for making the representation);
3. Defendant's intention to induce the plaintiff to act or to refrain from acting in reliance upon the misrepresentation;
4. Plaintiff's justifiable reliance upon the ...

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